Globally traded food commodity prices declined in November, led by marked drops for palm oil and other vegetable oils, the Food and Agriculture Organisation (FAO) of the United Nations said.

The FAO Food Price Index averaged 160,8 points for the month of November, down 1,3% from October and 8,5% from a year earlier. The index, an indicator of the monthly change in the international prices of a basket of food commodities, is now at its lowest level since May 2016.

Decreases in specific indices

The FAO Vegetable Oil Price Index hit a twelve-year low, declining 5,7% from October. Large palm oil inventories and abundant supplies of soya and sunflower oils fuelled the decline.

The FAO Cereal Price Index covering wheat, coarse grains and rice, dropped 1,1% during the month, reflecting large export supplies of wheat, intensified export competition for maize and new crop arrivals of rice.

The FAO Dairy Price Index declined for the sixth consecutive month, falling 3,3% from October, as large stocks and increased availability of export supplies – especially from New Zealand – led to lower price quotations for butter, cheese and whole-milk powder.

The FAO Sugar Price Index however defied the downward trend, increasing by 4,4% in the month. The increase was mostly due to a significant production decrease expected in Brazil, which has also lowered the share of sugarcane used to produce sugar to 35,8% from almost half a year ago.

The FAO Meat Price Index came in marginally lower, with only bovine meat prices rising during the month.

Updated forecasts for cereals output and trade

The FAO also released a new Cereal Supply and Demand Brief, marking down its forecast for world cereal production in 2018 to 2 595 million tons, some 2,4% below the record high reached last year.

The new forecast figures do not incorporate recent and significant historical revisions made by China to its grain production estimates, for maize in particular, which are under review by the FAO with a view to updated assessments early next year (2019).

World rice production this year remains on course to reach a new high of 513 million tons, representing a 1,3% increase from 2017. By contrast, the FAO lowered its forecast for global wheat output to 725,1 million tons due to smaller-than-earlier expected harvests in Turkey and the Russian Federation. The projection for world production of coarse grains was also lowered, to 1 357 million tons, due to downward revisions to barley and sorghum outputs.

FAO expects greater planting of winter wheat crops in the northern hemisphere as well as higher maize production in much of the southern hemisphere, although the prospects of a possible El Niño event impair the outlook in South Africa and neighbouring countries.

World cereal utilisation during the 2018/2019 season is expected to rise by 1,3% to 2 649 million tons, led by stronger feed and industrial uses of maize.

World cereal stocks are forecast to stand at 762 million tons by the close of season in 2019, some 6,5% below their all-time high opening levels. Maize inventories are anticipated to contract by 14%, while wheat stocks should decline by at least 12%. World rice stocks, however, are expected to increase by 2,7% to hit a historical high of 177 million tons.

International trade in cereals is still forecast to contract in 2018/2019 although the decline, estimated at 1,1%, is smaller than it was anticipated in November. – FAO